Global Heat Wave Toasts Wheat, Prices Soar

Global wheat prices have soared to multi-year highs as a heat wave sweeps across Europe and Asia and slashes forecasts for this year’s harvest.

The price increase could bring relief to North American farmers, who have largely avoided such scorching weather, just as Chinese tariffs sap demand for other crops.

Hot temperatures and drought typically stunt the growth of cereals and reduce their quality. With this in mind, the USDA has forecast that global wheat stockpiles will fall for the first time since 2013.

Most analysts say this wheat-stunting summer is an aberration. But the prospect of global warming has led other observers to predict an eventual shakeup for farming in parts of the world.

“Dry weather across the board has stifled yields,” said Tracey Allen, an agricultural commodities strategist. She said that the U.S. is well-placed to increase its export share in 2018 and 2019.

After years of over-supply, this year’s heat is hitting wheat yields in key growing areas like Russia, Ukraine, France and Britain and affecting the crop in Australia, China and other parts of Asia.

Wheat is typically harvested between June and September in Europe. Harvest

data so far suggests shortfalls. The International Grains Council has reduced its expectations for wheat production in the European Union.

“The bull story in world wheat is just unfolding,” research firm AgResource Co. said in a recent note.

Less wheat from other parts of the world is a boon for U.S. and Canadian exporters, who are expected to produce better crops this year.    Source: Wall Street Journal